How to Dissolve an LLC in Indiana

Find out how you can go about dissolving an LLC in Indiana.

Closing your Indiana limited liability company (LLC) will involve a
variety of tasks. Among the most important are what is known as dissolving and winding up the business.

Dissolving Your LLC

Your
LLC is registered with the State of Indiana. Officially ending its
existence as a state-registered business entity, and putting it beyond
the reach of creditors and other claimants, begins with a formal process
called dissolution. While an LLC may be involuntarily dissolved
through a court decree, or for administrative reasons such as failure to
file a biennial report, here we are concerned with voluntary
dissolution by the LLC members.

Regardless of when your LLC was
formed, in order to voluntarily dissolve, you first should look to the
company’s formational documents—the articles of organization and
operating agreement. In most cases, one of those two documents will
contain a section with rules for how to dissolve the company. Typically
the rules will require a vote of the LLC members on a resolution to
dissolve, and more specifically a requirement that some percentage of
members vote in favor of the resolution. Make sure you follow any
specific procedural requirements that may be part of the dissolution
rules, such as setting a specific time to meet and vote and giving
advance notice to all members regarding the meeting.

Indiana’s LLC
Act also allows for an alternative method to voluntarily dissolve an
LLC. The method will vary slightly depending on when your LLC was
formed, as follows:

Date LLC Formed

Alternative Method for Voluntary Dissolution

Before July 1, 1999

Written consent of all LLC members

Between July 1, 1999 and June 30, 2013

Written
consent of two-thirds of the member interests if there is one class or
group of members, or written consent of two-thirds of the member
interests in each class or group of members if there is more than one
class or group

After June 30, 2013

Unanimous
consent of all members unless a written operating agreement provides
that dissolution may be authorized by a lesser vote

For
either approach to dissolution of your LLC—relying on rules in
formational documents or on one of the listed alternative methods—you
should make sure to record the decision to approve the dissolution in
the official minutes of the dissolution meeting or on a written consent
form.

Note that dissolution, alone, does not prevent the
commencement of lawsuits or other proceedings by or against your LLC,
nor does dissolution abate or suspend proceedings already pending by or
against your company.

Winding Up

Following
dissolution, your LLC may only carry on business appropriate for taking
care of certain final matters that, collectively, are known as winding
up the company. You may choose to designate one or more LLC members or
managers to handle the winding up.

Under Indiana’s LLC Act, key winding up tasks include:

collecting LLC assets

disposing of LLC properties that will not be distributed in kind to members

discharging or making provision for discharging LLC liabilities; and

distributing remaining LLC property among the members.

When
it comes to the last two listed items, discharging liabilities and
making distributions to members, you are required to make payments in a
particular order. First, you must pay creditors, including LLC members
who are creditors, to the extent permitted by law. Note that it is
particularly important that you pay all outstanding taxes. Next, unless
otherwise provided in a written operating agreement, you must pay
current and former members any required interim distributions and any
distributions due to dissociated members. (Interim distributions
generally are approved payments to members unrelated to dissolution.)
Finally, unless otherwise provided in a written operating agreement, you
must distribute any remaining assets to members proportionally in
return for their contributions to the LLC. (The actual language of
Indiana’s LLC Act on this last point is a little unusual: The remaining
assets are to be distributed “to members in proportion to the return
contribution.” If you find yourself facing a disagreement among members
regarding final distributions, seek assistance from a local business
attorney.)

Notice to Creditors and Other Claimants

One
other key task is giving notice to creditors and other claimants of
your LLCs dissolution. Giving notice is optional. However, doing so will
help limit your liability and also allow you to more safely make final
distributions to members.

Under Indiana law, one way to give
notice is by sending a written document directly to known claimants
after dissolution. Proper written notice must include:

the amount that the dissolved LLC believes will satisfy the claim

a
statement that the creditor has the right to dispute the amount of the
claim and a description of the procedure for disputing the amount of the
claim

a mailing address where a dispute of the amount of the claim may be sent

the
deadline for receiving disputing claims, which may not be less than 60
days after the effective date of the written notice; and

a
statement that the claim will be fixed at the amount specified by the
dissolved limited liability company if a dispute of the amount of the
claim is not received by the deadline.

You
also may give notice to other (unknown) claimants by publishing in a
newspaper. As with sending direct notice to individual claimants, there
are specific rules for giving notice through publication. Generally
speaking, claimants have two years after the date of newspaper
publication to bring a claim.

There can be certain advantages to
giving direct written notice to individual claimants. In any case, if
you choose to give claimants notice of your LLC’s dissolution, you
should strongly consider getting assistance from a business attorney.

Articles of Dissolution

After
dissolving your LLC, you should files articles of dissolution with the
Secretary of State (“SOS”). Indiana does not require you to file this
type of final document, instead stating that an LLC may file the
articles. However, it is generally advisable to file articles of
dissolution. (If you have specific questions about whether to file, you
should contact a local attorney.)

To complete the articles of dissolution, you must provide:

the name of your LLC

the date of filing of the LLC’s articles of organization

the address of the LLC’s principal office; and

the date of dissolution.

You
may file the articles in person, by mail, or online. For paper filings,
you should submit an original and one copy, along with the $30 filing
fee. For online filings the filing fee is $20. Processing time will vary
depending on how you deliver your filing: walk-ins and filings sent via
express mail should be processed by noon of the following day, and
mailed-in filings usually require 3-5 business days. An articles of
dissolution form is available for download from the SOS website.

Be aware that your business name will become available for use by others after dissolution.

Tax Clearance

Indiana
does not require that you obtain tax clearance before dissolving your
LLC. However, the SOS does suggest that you consider filing a notice of
voluntary dissolution with the Department of Revenue (“DOR”) and other
state agencies. (The DOR itself urges you to file various tax forms.)

For
federal tax purposes, check the “final return” box on your IRS Form
1065 (if your LLC is classified as a partnership for tax purposes) or
IRS Form 1120 (if your LLC is classified as a corporation for tax
purposes).

Out-of-State Registrations

Is
your LLC registered or qualified to do business in other states? If so,
you must file separate forms to terminate your right to conduct business
in those states. Depending on the states involved, the form might be
called a termination of registration, certificate of termination of
existence, application of withdrawal, or certificate of surrender of
right to transact business. Failure to file the additional termination
forms means you’ll continue to be liable for annual report fees and
minimum business taxes.

Additional Information

You
can find additional information, such as forms, mailing addresses, and
current filing fees, as well as links to the online filing system, on
the SOS website.

Final Advice: Dissolving
and winding up your LLC is only one piece of the process of closing
your business. For further, general guidance on many of the other steps
involved, check Nolo’s 20-point checklist for closing a business and the Nolo article on what you need to know about closing a business.